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networking tool, a Facebook-like program as part of its Microsoft Dynamics CRM Online software.

“This is social wave one for us,” said Brad Wilson, general manager of the Microsoft Dynamics CRM.

The social networking capability, called Activity Feeds, is not exactly a killer app that will turn businesses around, but it will provide Dynamics CRM customers with a useful tool to create collaborative environments for CRM applications, industry analysts said.

Competitors such as Salesforce.com and Oracle Corp. already offer Facebook-like feeds within their CRM offerings.

Activity Feeds will be part of the next release of Microsoft Dynamics CRM Online, which is scheduled for the fourth quarter. Activity Feeds will be incorporated into the on-premises version of Dynamics CRM after that, Wilson said.

Companies are increasingly interested in applying social networking capabilities to a variety of CRM initiatives, according to analysts.

“There does seem to be interest with our clients about how to enable sales and customer service workers and their managers to collaborate more effectively with their teams,” said William Band, an analyst with Forrester Research Inc. in Cambridge, Mass. “A lot of experimentation is going on.”

Microsoft adapts Facebook-like interface for social networking in CRM Activity Feeds will allow users to organize discussions around CRM data by projects, products, services or customers with a Facebook-like format allowing for posts, links, likes. Customers could set up a community around a product that could include external sources like partners and customers, Wilson said.

He suggested customers still need time to figure out how to best take advantage of social tools within CRM applications. “Most don’t know how to exploit it yet,” Wilson said. “So as we develop best practices, the question is, How do we do this productively?”

For example, Wilson said people chitchatting on Activity Feeds may at first be considered a waste of time. But if a manager sees the chitchat helping to foster a team environment, then it is ultimately a “high-value” stream.

Forrester’s Band agreed that companies are still trying to get a handle on how to make CRM collaboration tools truly useful.

“More collaboration sounds good in theory, but most organizations don’t have any experience on how to capitalize on this capability in a practical sense,” Band said. He added that managers need to ask themselves, “How will people need to work differently for this capability to be a benefit? Or, will they be overwhelmed by an avalanche of new information being pushed to them?”

“Certainly there is a feature function race between Salesforce and Microsoft,” said Rebecca Wettemann, vice president of research at Nucleus Research in Boston. “Salesforce has made a lot of noise about the benefits of Chatter, so it is natural that Microsoft has an answer to that.”

Microsoft already offers Activity Feeds within its SharePoint document management platform. Wilson said customers using both SharePoint and Dynamics CRM would be able to set up triggers to notify CRM users of changes in documents related to a particular account or project. Microsoft has developed integrations between Dynamics CRM and external social networks like its Social network accelerator for Twitter.

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